British Gas owner Centrica is prepared to go hostile in its 850p-a-share bid for oil and gas group Venture Production as its prey holds out for 950p.

The Takeover Panel last week gave Centrica until 13 July to make a full bid for Venture, having bought nearly a quarter of the company at 725p a share in March. This valued Venture at £1.1bn, while its management is looking for around £1.45bn. Centrica has confirmed that it is mulling a bid for the whole company. If it does not make an offer by the deadline, it must walk away for at least six months.

Sources close to the companies confirmed their respective strategies. One banker said: "Centrica is committed to a much lower price and might go hostile if Venture sticks to 950p-a-share. With more than one-fifth of the company, Centrica could have a go at a hostile bid."

Another source said: "To get any sort of traction with the Venture board, any price-per-share number needs to start with a 'nine'." Centrica previously attempted a 950p-a-share offer in 2007.

The situation is further complicated by private equity stakeholders Arclight and 3i, which have bonds that can be converted into shares should any offer be above a set price, thought to be 915p a share. This would give them a stake of about 10 per cent in the purchased company.

An industry source said that Legal & General, a leading Venture shareholder, would hold the key to whether a hostile bid could succeed.

Venture works in the North Sea and produces 45,000 barrels of oil a day. Its revenue last year was nearly £500m, with operating profit of £231.1m. Centrica is thought to want to access those reserves to help supply energy to its 10m retail customers.

Centrica has more money than expected available since its purchase of a 20 per cent stake in British Energy. It paid £2.3bn for the shareholding, valuing the company at 10 per cent less than when French giant EDF bought British Energy for £12.4bn last year. Under the terms of that deal, it was agreed that Centrica would take a stake, though the terms were subsequently revised as a result of the fall in electricity prices.

Venture was up 0.39 per cent on Friday, closing at 771.5p. Centrica was up 3.87 per cent to 234.75p.